Chipotle Mexican Grill (CMG) – A Quality Name Facing Near-Term Challenges, Long-Term Opportunity
Chipotle has been through a rough stretch — and that’s exactly why this may be the moment to start paying attention again. After falling about 45% year to date, the stock trades around $32, one of its lowest valuation levels in years. While same-store sales have softened and management lowered its guidance, the long-term fundamentals still look strong.
Despite the recent slowdown, Chipotle continues to grow. Revenue climbed 7.5% year over year last quarter to $3 billion, with earnings up 7.4% to $0.29 per share. The company is on track to open more than 300 new locations this year and expects to add up to 370 next year, including its first international expansion through local partnerships. That growth plan alone could drive meaningful upside over time.
Chipotle’s near-term challenges stem largely from softer demand among lower- and middle-income consumers — roughly 40% of its customer base — and a slowdown in discretionary spending. However, the brand continues to innovate, recently introducing new menu items like carne asada and red chimichurri, which have already helped lift traffic. Management is also investing in technology to improve efficiency and maintain profitability as inflation pressures margins.
At roughly 24x forward earnings, Chipotle is trading near multi-year lows relative to its own history, giving patient investors a chance to accumulate a premier restaurant stock at a discount. With over 4,000 stores today and room to grow to 7,000 domestically — plus international expansion just beginning — this may be an opportunity to buy a world-class brand before the next growth phase takes hold.
